BCG Transform Index:
Germany & Austria
Financial study on sector performance
APRIL, 2023

Disclaimer

The basis for this study is a data set extracted from Capital IQ for companies listed on European stock
exchanges with a minimum revenue of €500 million
Companies from the financial industry and Ukraine/Russia are excluded

The analysis covers data from 2018 through the last twelve months (LTM)
LTM refers to available data from Q4-2021 to Q3-2022
The ranking is based on a comparison with other industries within the same region
Please note that the statements made relate specifically to this data set1Copyright © 2023 by Boston Consulting Group. All rights reserved.

Our data set includes 1,373 European companies, of which 192 are from Germany or Austria, that meet theseselection criteria

Most resilient
sectors

Most impacted
sectors

Rankingcompared with
European average
BCG
recommendation•

The Health Care sector exhibits high scores in profitability and solvency, taking advantage of digitalization andthe increase in demand for health care services since the pandemic•

The Metals & Mining sector scores highly in profitability and financial stability, capitalizing on the surgingdemand after the pandemic and price increase from constrained supply in recent past•

The Chemicals sector scores above average in all dimensions, benefitting from the industry's high degree ofdiversification (wide range of application fields of its products) and broad participation in past economic uplift•

The Consumer sector grapples particularly with issues concerning profitability, facing challenges fromstrong competition and opportunistic consumer spend behaviour•

The TMT sector sees challenges along all major KPIs and might see further impacts from upcoming economicchallenges•The pandemic and current challenges continue to significantly impact the Leisure and Tourism industry,
which struggles across all dimensions, most notably in profitability with negative EBITDA margins since 2020•

The German and Austrian Health Care sector has seen a strong development since the pandemic comparedto the European view•

Other sectors in line with ranking as per European view

In the context of persistent crises, companies cannot continue to remain in a reactive firefighting mode, butrather must focus on proactively seizing opportunities supported by an adaptable cost structure (that fitsearnings), a strong financial position, and an adjusted go-to-market strategy. In a nutshell: Resilience is key tobeing successful

Source: BCG Analysis, Germany Trade & Invest

Take-aways
Operational view
Post-pandemic, revenue is on the rise
across all sectors and has surpassed
pre-Covid levels. However, EBITDA
margins have not yet returned to preCovid levels in selected industries,
notably the Leisure and Tourism
industry that still exhibits a negative
EBITDA margin in LTM

Solvency
The proportion of companies withnegative free cashflow has risen
steeply in the LTM, now amounting to38%. This is markedly above theEuropean average of 27%

Financial stability
Net debt has risen significantly in LTM
for the first time since 2019, with just
25% of it being rated investment
grade. This performance is notably
worse than Europe's already sobering
45% investment-grade debt
2

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Sector performance and resilience in the face of past andprevailing crises

Sectors that provide fundamental input for industrial production proved to be
the most successful amidst the past crises — Health Care in G&A outstanding

12345

Health Care
Metals & Mining

Metals & Mining
Chemicals

Chemicals
EnergyEnergyAutomotive

Automotive
Other

Profitability

Solvency

Financialstability

9962474102166820108119510419SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix; A total score of 19 points isexhibited by both Energy and Automotive. However, since Energy performs notably better in profitability, it is ranked higher; Source: Capital IQ, BCG analysis

3Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

Leisure and Tourism remains the industry that has been most severely affected678910Industrials
Industrials

Other
Health Care

Consumer
Consumer

TMT
TMT

Leisure & Tourism
Leisure & Tourism

Profitability

Solvency

Financialstability

87

3

18

4

2

915

2

5

7143

3

5

11

1

1

35

SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix.
Source: Capital IQ, BCG analysis

4Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

Operational view | Revenues exceed pre-pandemic levels significantly withEBITDA margins mostly recovered
EBITDA margin in G&A in %, 2018–LTM

18.3%
2.6%

-5.1%

1,730

1,776

578

610

113
121

134
103

95
142

140
115

2,028
1,686
491
104
147

376
93 19

85

182019

2018

166

2019

Note: LTM = LTM Q3-2022
Source: Capital IQ, BCG Analysis

153

136
128

196
179

197

94
19

2020

14%
18%
10%
6%

304
194

9%

542

462
89%
16%

164
158

136

5187

110 12222021

127
12%

657

598

372

395
93 18

158

2,359

123
11%

9%
14%
12%
21%
10%
7%

4%

99
11%

8%

109
15%

8%

7%

13%
11%

37%

30%

27%

3%

8%

8%

12%

27%

25%

8%

8%

9%

9%

-27%

-26%

2020

2021

2019

14%

13%
11%

26%

2018

128

14%
15%

25%

195

LTM

17.6%

10.7%

-11.7%

Automotive

Chemicals

Health Care

Leisure and Tourism

TMT

Consumer

EnergyIndustrials

Metals & Mining, Const. Mat.

Other

13%
10%
24%

-1%

10%

LTM

5Copyright © 2023 by Boston Consulting Group. All rights reserved.

Revenue in G&A in bn EUR, 2018–LTM

Solvency | After a steep rise in 2021, 38% of companies in G&A have negative
FCF in LTM, which is significantly higher than the European average of 27%

192
78%

2021

1681%

2580%

1164%
36%

1220

60

90%

78%

10%

22%

60

42%

19%

20%

192

1625

11

1220

64%

55%

67%

75%

33%

25%

LTM
38%

44%
56%

36%

45%

8

26

1385%

85%

15%

15%

826

1363%

58%

38%

42%

63%
100%58%

22%

62%

138%
0%

160%
100%
40%0%

77%
23%

Total

Europeanbenchmark fornegative FCF in LTM
Positive FCF

27%

AutomotiveConsumer

Chemicals

EnergyHealth Care

Industrials

Leisure andTourism

Metals &Mining,Const. Mat.

TMT

Other

48%

28%

28%

31%

21%

29%

16%

32%

22%

16%

Negative FCF

Source: Capital IQ, BCG Analysis

6Copyright © 2023 by Boston Consulting Group. All rights reserved.

Distribution of companies with negative/positive FCF in 2021 and LTM

Financial stability | Net debt has increased further in LTM with a notable
deterioration of the quality of net debt
Net debt by rating1 in G&A in % and bn EUR, 2018–LTM

Net debt in G&A in billion EUR, 2018–LTM
6.3%

24.7%

808

648
421

830

1170
77
0

28 1
71
150

43
86
17
1

27 1191
1111

46

25 11

358

24 12

48
94

86

101
8822

365

387

375

880

828

6105
7

51855

668

3392

123
10165

184

1

3
LTM

10%

23%
23%

852
25%

30%

25%

50%

23%
3

158
1

35%

33%

852

920

57%

54%

42%
2018

20182019

2020

2021

Automotive

Chemicals

Health Care

Leisure and Tourism

TMT

Consumer

EnergyIndustrialsMetals & Mining, Const. Mat.

Other

45%
26%

2019

2020

Investment Grade2021
Mid-GradeLTM
Sub-Performing

1. The ratings are based on the Net Debt/EBITDA leverage measure. Debt with a Net Debt/EBITDA ratio below 3.5 is considered investment grade, while debt with a ratio between 3.5 and
4.5 is classified as mid-grade. If the ratio exceeds 4.5, it is considered sub-performing debt. If EBITDA is negative, net debt is automatically classified as sub-performing.
7Source: Capital IQ, BCG Analysis

Copyright © 2023 by Boston Consulting Group. All rights reserved.

1.2%

8Copyright © 2023 by Boston Consulting Group. All rights reserved.

Appendix

BackupProfitability

Solvency

Financial stability

Total ranking

The profitability ranking isbased on EBITDA growth
between 2019 and LTM, with
the industry having the lowest
EBITDA growth being assigned
the fewest points (1) and theindustry with strongest EBITDA
growth the most points (10)The solvency ranking is basedon the growth sector's overall
cash account LTM, thepercentage of companies withgrowth in cash LTM, and theinterest coverage ratio, withthe worst overall performanceassigned the fewest points (1point) and the strongest themost points (10)The financial stability
ranking is based on the LTM
equity ratio and net debt rank,which is determined by
the proportion of mid-grade
and sub-performing debt, withthe worst overall performanceassigned the fewest points andthe strongest the most points

Once the points for eachdimension have been
determined, a total ranking
score is calculated by summing
the points of each dimension.
The highest sum of points
indicates the best
performance, the lowest thepoorest performance9

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Ranking methodology

Backup

Number of German and Austrian companies within each industry in theunderlying database192• Companies listed
on European stock
exchange with atleast €500M
revenues60

1625
11122620
1

Automotive Consumer Chemicals

Source: Capital IQ, BCG Analysis

EnergyHealthCare

Industrials

LeisureandTourism

138Metals& Mining,
Const. Mat.

TMT• Financial industry
and companies
from Ukraine andRussia excluded

Other

10

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Σ17Selection criteria:

Backup

The data set consists of European companies that meet the selection criteria
for this study
1,373
244

105
78

28

39433527 12 3238
165632
1255

51 45
21158

138
Total

Count ofcompanies
that meetselectioncriteria

6895

Source: Capital IQ, BCG

11Copyright © 2023 by Boston Consulting Group. All rights reserved.

159 164

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